Housing Shortage Set to Double to 290,000

THE HAGUE, 30/10/13 - The number of building permits issues has landed up at a new low. And because the number of households is simultaneously growing, a big housing shortage is threatened. The Central Bureau for Statistics (CBS) reported Tuesday that in the 12 months through August, municipalities issued 29,877 building permits. The number of permits has never before fallen below the 30,000 level since the CBS began registration in 1995. The shortage of housing in the Netherlands is shooting up drastically as building production lags behind. In 2020, a study commissioned by the home affairs ministry predicts a shortage of 290,000 units by 2020. Building production has shrunk in recent years, from an average of 80,000 to less than 60,000 a year. The CBS figures for August 2012-August 2013 show that the trend is further downwards. Additionally, another 15,000 homes are demolished annually. And because the number of households is expected to increase by a steady 60,000 a year in the coming years, the housing shortage will increase rapidly. The study for the ministry, carried out by research bureau ABf, maintains the broadly accepted Primos prediction model, already in existence for 35 years. It predicts a cumulative shortage of 160,000 this year, 20,000 more than in 2011. "The tension is increasing further,” says Co Poulus of ABf. This would under normal circumstances result in demand for new homes, he notes. But the demand is now structurally much lower than would be expected, because affordability of housing is still limited. Households and companies solve the problem by splitting up homes and converting office space to make it liveable in. “The housing market can soak up this and that, but at any moment, there will be no more absorption capacity and then a housing shortage crisis like that in the 1950s will arise,” predicts Poulus. The growth in the number of households reflects the inflow of migrants from other European countries and the progressive ‘individualisation’. Out of every five extra households which will be added in the coming years, four will be one-person units, the Primos model shows. The shortage of housing as a percentage of housing stocks will increase from 2 percent in 2012 to over 4 percent in 2020. In the Amsterdam and Utrecht regions, tension will rise with shortages of 8 to 10 percent. Poulus: "Prices will have to come down. Because the demand cannot supply the current prices. Local authorities will have to reduce their ground prices, which generally account for one-third of the selling price of a newbuild home. And contractors will have to build smaller units, build more in series, and possibly with reduced quality.”